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Amazon’s “Hollywood” tablet could launch with free movie subscription

Research firm Detwiler Fenton & Co. has provided fresh insight on Amazon’s reported tablet offerings, suggesting that its 10-inch “Hollywood” device is to launch with a free movie subscription when the device goes on sale.

The 10-inch Hollywood tablet is expected to launch alongside colour Kindle e-readers before the end of the year, providing movie access for a limited time to buyers of the device, offering access for free to Prime customers. Free access via a Prime account would mirror Amazon’s strategy via its website, associating Prime accounts with a superior Amazon experience.

In May, we reported that Amazon had placed orders with Taiwanese notebook maker Quanta Computer to manufacture the Amazon tablet, also working with electrophoretic display (EPD) maker E Ink Holdings (EIH) which will supply touch panels as well as its Fringe Field Switching (FFS) technology.

Piper Jaffray analyst Gene Munster also predicted that the rumoured Amazon Android tablet would perfectly compliment the retail giant’s Kindle devices to help the company sell as many as 2.4 million portable computers in 2012. Munster also suggested that Amazon could also release 7-inch tablet at the end of this year, pricing it at around the $349 mark, with the 10-inch model retailing for $449.

Detwiler Fenton & Co explains its insights:

As we have written previously, color eReaders in our opinion will take the majority of the tablet market share beneath the iPad because of price and content advantages (see 3/15/11 DF note: AMZN: Filling the low end tablet niche). The remaining niche of tablets (perhaps 5MM-10MM total units) will be fought over by a growing number of vendors including the Chinese OEMs offering $300 wholesale costs to the carriers. This would appear to put further pressure on premium priced tablet vendors Motorola (MMI) and RIM (RIMM), each of whom we expect will only sell somewhere in the 1MM unit range in 2011.

With Amazon buying European Netflix equivalent Lovefilm and offering its existing movie service in the US, a movie subscription could be another service that differentiates it from offerings from Apple and other tablet vendors.

With Amazon still quiet on its tablet plans, reports remain speculative. With a rumoured release before the end of the year, Amazon will need to announce devices if it is to build demand before launch.